PREFACE #

Austerity in the contemporary sense of taming welfare-state capitalism has been haunting states and societies around the world for quite some time. First imposed on a wide range of countries in the global south by financial institutions following the world debt crisis, austerity came to hit members of the European Union in particular with a vengeance following the global financial crisis. Budget consolidation, debt reduction, spending cuts, efficient spending and so on are mantras nobody can escape in the sphere of public finance. Presented as the solution to the problems of overly generous developmental and welfare states, austerity itself must be considered a problem in search of solutions. Many years of dedicated austerity-related policies—of budget cuts, of privatization and deregulation—have not led to a revitalization of the economy, to better development and faster growth. Lackluster private investment and a still increasing propensity to marketization and financialization suggest the bitter medicine of austerity is not working.

Despite all the evidence of failure, we hear the battlecry: ‘Austerity is dead. Long live austerity!’ Why do the architectures of austerity remain in place? What are their foundations and core pillars? Who is supporting austerity, and why?

Austerity: 12 Myths Exposed debunks commonly held beliefs in support of austerity as the solution to addressing stagnation and economic crisis. Austerity staples like ‘live within your means’, ‘Swabian housewife economics’, ‘public spending hampers private investment’ and the new authority of alleged maximum debt and deficit levels, such as the Maastricht criteria governing the eurozone, are tackled and taken apart. While this booklet does not provide a full recipe for an end to austerity, those who are looking for alternatives will find a range of arguments needed to clear the pathway toward paradigm change. One thing is clear: austerity is a tool of national and international financial interests—not a solution to the problems caused by them.

This booklet has been published as part of the Austerity and its Alternatives project, which seeks to expand conversations around alternatives to austerity among academics, non-academic researchers, practitioners and policy-makers. The editors would like to thank all authors for their contributions and the Friedrich Ebert Foundation for financial support.